“Socialize the risk, privatize the profits.”  That’s the big money Wall Street Socialism espoused by so-called “conservatives” these days.  Whenever I scream about some CEO making 500x the average worker’s wage while laying off tens of thousands and presiding over huge stock losses, some conservative tries to tell me that these CEOs are highly gifted entrepreneurs taking serious risks, and that there are so few of them that supply and demand means these guys are like the Kobe Bryants and Alex Rodriguezes of the financial world and deserve their massive nine-figure incomes.

And I would buy into that, if ever these guys actually had to suffer the downsides of their risks.  The recent bail-out proposed for Fannie Mae and Freddie Mac illustrates this perfectly.  People mistake these two institutions as public government programs, but they are not; they are for-profit private corporations.  So if we taxpayers are going to bail them out, to suffer the downsides of the risks, why not just nationalize them and get it over with?  Robert Borosage in the Huffington Post hits the nail on the head:

Robert L. Borosage: Wall Street Socialism
If the guarantees work, private speculators, having driven the stock down, will clean up on the upside. And the bank’s CEO’s will continue to pocket the multi-million dollar salaries that are de rigueur on Wall Street. Call it Wall Street socialism. Their losses are socialized; their profits are pocketed. You and I will pay for their failures. And if conservatives have their way, their families will pocket their successes, without even having to pay a tax for the transfer of the estates we’ve helped to create.

These enterprises are operating on our tab now — completely. Why not just nationalize them, as even that font of economic convention, Sabastian Mallaby suggested yesterday in the Washington Post. Sure, we’d have to add the $5 trillion in debt to the federal balance sheet, but we could add the assets also. And after Paulson’s announcement, global investors are already toting up their debts onto the federal balance sheet.

Why pay dividends to shareholders when they are essentially playing with our money? Why pay managers of public enterprises the bloated pay packages of Wall Street speculators? Why allow them to finance lobbyists to shield them from accountability? The fiction of their separate existence has been exploded; let’s save the dough and run them efficiently.